Bitcoin Forum

Let me start by saying that I do not know all of the facts, which is the reason for this topic.  The person who can provide the most convincing argument to my concerns will be given 1 BTC should I decide to invest.  That incentive is just to put out there, really what I would like is a civil and hopefully mostly troll-free discussion. 

From the FAQ, "in the first 4 years of the Bitcoin network, 10,500,000 BTC will be created."  So 2,625,000 BTC's per year.  BTC's fluctuate in price but lets use $15 per BTC as a baseline.  In order to sustain that price over a year period, NEW money would have to be injected in excess of $39 million per year.  Perhaps slightly less as not all will go to market, so lets say, $30 million.  First problem I see:

Where does this money come from?  We have very small scale exchanges, and the largest one has been hacked and isn't even open yet.  A further barrier is the $1,000 transaction limit.  How do you get $30 million a year in with that sort of limit imposed.  Yes, that limit can be removed by providing verifying information, however, the scale we're talking about is going to take institutional investors.  Will these institutional investors be willing to lose their anonymity to invest here?  And even so, the next is my biggest concern....

Bitcoin in unpatented intellectual property.  Everyone who has ever taken an Econ 101 class should understand the law of supply and demand.  Lets say BTC gets this $30 million investment per year, that sort of money is going to spur competition.  As long as there is demand and profit to be made, competitors will come.  The primary protection against competition is patents, trademarkets, etc..   Lets look at a company like Pfizer for example and their immensely successful drug Lipitor.  Lipitor is patented resulting in Pfizer being the only drug manufacturer allowed to produce the product.  Once that patent runs out, generic brands of the drugs will come online and Pfizer will no longer be making large gains on the drug.  They know this, everyone knows this. 

Bitcoin has no patent and in fact, is open source.  There is nothing to stop a competitor from coming in, copying the model, maybe even improving on it, and bring it to market.  Look at it this way, if you're an investor would you really invest multi-millions of dollars worth of capital in something that can be copied today?  Why not create your own?  Whose to stop Google from coming in and making Googlecoins?  Any profitable venture will result in competition.  This may be good for P2P currency's longevity but I'm strictly talking about BTC from an investment standpoint.  If it were legal to make an exact copy of Lipitor and bring it to market today, would it happen?  You're damn right it would.

I have other concerns, the bad press, the security issues, lack of merchants, etc. but really those are my two big ones and they sort've tie in together.  Again, I'm coming at this from an investment standpoint.  I see Bitcoin's value as rampant speculation.  I don't want to use the "B" word, but the price appreciation is unsustainable (LONG-TERM) in my view.

What are your thoughts? 

IMHO you hit the nail on the head with your very first question.

Quite frankly - this is also the sole reason to speculate(not invest) _RIGHT NOW_, because the longer you wait, the more this becomes a pressing matter and the people who are holding the majority of the 6+ million BTC might get the idea of cashing out, at which point the game is effectively over(or at the very least dominated by their whim).

In short - buy 10x11$ for 110$ of 10 BTC, sell them at 15-20$, be happy you have a few free pizzas.


I would never, ever, ever recommend to anyone ever to put real money into this game of musical chairs that goes above "a couple of pizzas"( i.e. if you have x risk capital you can afford to lose completely, no more than 1-3% of that x) amounts(some have sunk 10k+ into this - insane!).

You can either work within the $1000/day or $10,000/month withdrawal limit or identify yourself and go for more. $1000 withdrawal is interesting to any country and Mt Gox has decided to impose those rules. You aren't anonymous at any level on any other established exchanges that I know of.

There are entire companies that make money based around open source products, some have existed for 15 or more years. This is nothing new. CentOS distributes RedHat's Enterprise OS exactly, minus trademarks. Nothing will stop someone else from starting a bitcoin network except the fact that they will be fighting the same uphill battle, unless they use it for a different purpose.

If your own words are "I see Bitcoin's value as rampant speculation." Then why would you even consider investing unless you like rampantly speculative markets. Do whatever analysis you think is necessary since you're coming at it from an investors perspective.

Quit standing by the pool with your shirt on asking how the water is though, you're blocking my sun. :)

You should invest in it for the same reason you should invest in foreign currency.



Assign a probility that each of the following will occur or is true.  

1) Eventually, there will be a worldwide currency
2) Since the project is opensource, basically it puts everyone on an even playing field to decide how the currency works
3) all money is worth what you can get for it no matter what kind of money it is
4) you should not treat bitcoin as an investment and only use it when its more convienient then regular cash (IE - tipping random guy on the forums for his help)

There has been much written about the efficacy of bitcoins as the future currency. It's not a question of if, it's a question of when. You don't need an exchange to acquire bitcoins. Simply find someone to make you a reasonable trade and meet them in person. Bitcoins will continue to grow in value, but they will not be used as a primary transaction currency until they become quite valuable. When applications come out that allow you to send small fractions of a bitcoin from a smartphone, it will be simple enough to use for small purchases. It is scalable enough to buy a cup of coffee or to fund every major economy in the world.

Well first of all, the limit is $1,000 per day at MtGox, and $10,000 per month.  So cashing out 6 million BTC at $15 each would take 750 person-years.  That's not so ridiculous.  Secondly, do institutional investors really usually invest anonymously?

Bitcoins are not an investment, they do not yield and dividends. If you're holding them with the intention of making a profit by selling them on a later date, all you're doing is speculating on their worth on that specific date.

Bitcoin is a value exchange system, that's what it was primarily intended for. The likelihood of making a profit by holding them comes from their design that rewards savings unlike say fiat currencies where saving is punished. But that's it. There's no promise they'll be worth more than what you paid for them at the exact moment you decide to exchange them for something else.

1. There are actually many exchange sites open and BTC are being bought and sold constantly on all of them. I had recently joined a brand new exchange sites based in Canada (opened maybe no more than a month ago?) and it's already pulling 1700-2200 (from what I've seen so far) BTC exchanges per week. At this rate, and your flat rate of $15/BTC, this brand new site which is still in beta and represents maybe 1/50th of bitcoin users will have dealt with approx. 1.2 million in one year minimum. I can't say how much of that will have been newly laundered cash, but you understand my point I'm sure. In the end the money comes from people working their day jobs, and investing a few bucks here and there into BTC by buying them on exchanges.

2. I really don't think this case applies to bitcoins. If you take a look around the forums, for one, you will see that most, if not all people here would absolutely hate to see bitcoins go down the tube. It's made a huge name for itself and it is the first digital "currency" out there that's actually had positive feedback from most everyone who's dealt with it or heard about it. If there is a competitor that decides to start up down the road, I'm sure a few bitcoiners may jump boat and test it out here and there. The major selling point of bitcoins now, is that it's already here. Everyone knows about it and i'm sure no one wants to start from scratch with a digital currency that is worth 0.00000001 USD once again. Like I said, people may jump boat and mine a few here and there *just in case* but I can hardly see any significant group sticking it out when there's already a proud group in this community.

As for the publicity, who cares. If others don't want to get involved right now, that's a shame. But look at the numbers on these forums or even how many people are mining on any given day. bitcoins user base at this point in time is relative to a moderate sized  city and it grew to that in a matter of a couple years. If the trend continues, and it will, then anyone considering creating a parallel competitor is simply mistaken.

I hope this helps you out.

I don't see that as a huge problem, recently mtgox had daily volumes of ~1mill USD. (that's equivalent to 365million USD a year, over 10 times the value needed. And we're less than 62000 ppl trading there, imagine the size when we pass 1million ppl).




I don't believe you can compare the old-fashioned patent world with open source. It's like comparing an xbox to a supercomputer.
This model (opensource) is what Bill Gates stated is the only thing that can "kill" microsoft. And bitcoin was first, it has homeadvantage in trust.
I actually hope someone will make a bitcoin competitor it could boost public awareness and trust in decentralized currencies.

Bitcoin got to where it is today and I never expected it, so why couldn't it be bigger in the (near) future?
Just do what feels comfortable to you and always realize there's no way to know the future...
If it wakes you up every night I wouldn't do it... Not healthy...

I laugh at patents. The ONLY thing to fear is a vulnerability on the SHA2 hashing algorithm. But then we'll just adopt SHA3 for example or another virtual currency that uses SHA3.

I think the absolute majority of ppl invested in BTC are capitalist pigs who enjoy rampant speculation: But I, like many others, would not have invested in it if we did not think that the project has are serious opportunities to grow and it is basically sound.

For a competitor to emerge would need at least that it offers major technical improvements. And if it happens, no problem, just be ready to jump in early.
 
And if you need to invest millions anonymously, just split them up.

even if you hold that opinion for electronic decentralized fiat currency, that's definitely not true for bitcoin.
right now, a single large actor can wipe out bitcoin completely. "googlecoins" would probably not even require any large improvements, just the name and promotion behind it.

the only thing that stops any single merchant from doing that is widespread use of bitcoin in real business. it doesn't matter how many people trade at Mt.Gox or how many exchanges there are.

I should make "Bitcoin is either the Myspace of e-currencies, or more likely one of its prececessors" my signature. many of my posts seem to end on that point.

1) The exchanges have put those limits in place as fraud protection. As volume grows and special dispensations are arranged then that limit will be adjusted as required

2) Money existed before patents. A Bitcoin is expected to reasonably represent a share in the value of the overall Bitcoin economy.

Given that Bitcoin solves a lot of problems that currently exist within the usual currencies then over the course of time it may come to pass that it gets wide adoption. That alone is sufficient to make it worth serious consideration.

The limit is on money out, not money going in.  The price goes up when more goes in than out.  More goes in than out because people tend not to sell an asset increasing in value.  That's how real estate, the stock market, asset bubbles, HYIPs, ponzi/pyramid schemes, etc. work.  After the price doubles, most people don't withdraw their gains.  They keep their money in so the principle plus the gains double again.  I'm holding (and buying more) BTC because I expect way more new money to come in than money going out (excepting short-term fluctuations).  Also, much of the sale of BTC aren't actual withdraws.  Its traders holding returns on the sidelines waiting to buy back in.  All the new money coming in + old money going back in pushes the price up, bringing in more new money, creating a self-reinforcing positive feedback loop.  Still a thin market with much room to grow (estimated market capital between $100 and $200 million or about the size of a small cap stock).


Its open source.  That's why people trust it.  Copies won't proliferate, because bitcoin was first to market and the network effect is far too great.  Additionally, miners have enough hashing power that one big miner could overtake a newly competing block chain by becoming more than 50% of its hashing power.  Bitcoin is the only one already big enough to resist this attack.  Network effect.  Same reason why any Facebook competitor is probably doomed to failure at the start, though it is simple to make a social networking website (there is even open source code to start a competing social networking site for minimal cost).

The $1,000 limit of Mt. Gox is no transaction limit - you can easily put 1 million USD into Mt. Gox and buy all available Bitcoins in one transaction. The limit only applies to withdrawals. I agree it is still a limiting factor but it is definitely no transaction-limit.

I don't see a problem with this - it's not like there is a public record of which person or company bought what on Mt. Gox. You have to identify yourself just as you have to identify yourself when you open a bank account.

Who exactly would those competitor be competing against?
Bitcoin is no company - it is a community of people who trust in it. A competing "product" would definitely have to be decentralized and open-source as well because otherwise it is really hard to imagine people would trust it. So by definition, this company could not control this competing currency and you would end up with just another blockchain with maybe different rules and probably a few fancy services and apps around it.
Don't underestimate the first to market advantage of Bitcoin - do you really think it is so easy for a company to come up with a viable business plan to steal all that momentum from Bitcoin? Maybe, but they would have to invest big time into software development and marketing. Its not just copying the code and putting your name in the genesis-block.

And what would an exact copy of Bitcoin be worth? Exactly nothing!
A competing product would have to have a real unique advantage - something that can simply not be done with Bitcoin. Many ideas have floated this forums how people think Bitcoin could be improved, but as of yet nobody really found a compelling alternative which people wanted to abandon Bitcoin for. I'm not saying it is impossible, but you have to have a really good idea and the means (=money) to implement it and advertise it.

Yes, it is going to be a bumpy ride and the market will stay volatile for quite some time but that is not necessarily a bad thing. As for the "real value" - who knows, the market will decide and the price will be whatever it will be. There are compelling arguments however that Bitcoin could be used for quite a significant percentage of online payment and that sector is not especially going to shrink anytime soon.

Interesting times ahead I'd say...

I think it is, depending on the actor.
Apple computers, providing an easy way to buy coins and 20% discount on iTunes when buying with coins would do it, imho.
if they're smart enough to let go of all control and take another large merchant onboard, no question.

You may call it speculation. I call it an AMAZING idea backed by a PASSIONATE community. Why don't you go read the development section and judge for yourself. That is what sold me.

Ok but then the added value comes from the millions of USD which went into marketing to push the Apple brand and from the 20% of iTunes revenue. These are the big investments needed that I was speaking of.

I'd argue that there are only very few companies who could pull that off (ie. have a big enough name and market share) and no matter how you put it: it would cost them a lot.

Besides, I personally would count Apple out because they will not be giving up any kind of control anytime soon ;)

Totally agree with your post. I would not "invest" in BTC as a speculator, I would do it to help change the world (not that I want to enrich early adopters) I think about all those Ron Paul speeches on sound money, personal responsibility. Insert BTC into those speeches and you have an idea of what he his talking about. ATM however, Gavin put it best when he said BTC is like an internet startup and that BTC may fail as a currency but succeed as a commodity.  

Main weakness of BTC imo is mark/tux, who has proven he has ~500k of btc and runs largest exchange.  Not only conflict of interest, rife for manipulation.  Am hopeful this will work itself out.  Tux has no interest in destroying btc, which he could do in a heartbeat and run.  

I think point of BTC is to show people what is possible.  I saw BTC over a year ago and thought was pointless, GOX proved that wrong.

Quite frankly I hope everyone buys at least 1 BTC ASAP and holds on to it.  If gox has 60k peeps now and that grows to 600k by end of year (which is feasible given press) possible that all will hold on to at least 10 BTC.  If that happens, and exchange rate of BTC widens that will benefit all.  If BTC can prove peeps don't need fed res, will be devastating to status quo as everyone will want btc.  

There will be many competitors and should be, may the best win.  BTC/derivative is the future, no doubt in my mind and likely most on this forum.  The best thing BTC can do right now is become so expensive vis a vis USD to make USD more of a joke than is.  The threat to this is tux, and any other major holders of BTC who want to cash out.  

So IMO buy 1 BTC hold it and get all your friends to buy 1BTC and hold.  

FYI - Nefario on bitcoinweekly expects gox to be taken out before end of year.

For 300 years there has been a central bank located in the world financial capitol.  Since the Bank of England's founding in 1694.  America took over the title of world financial capitol after WW1, and continued with the same central bank modeled after the BOE.  Challenges to the western central bank's dominance over the control of money and credit have been met with force.  Be the challenge from other countries, individual currencies, or strict gold accounting the central bank has survived - for 300 years.  The role of the central bank in the wars, genocides, etc especially of the 20th century is well documented, and many of these things would not be possible if not for it.  A distributed currency, like bitcoin, is the latest challenge to the central banking model.  It could be the best one in that 300 year span.  I hope it can fly under the radar and grow for as long as possible, we'll see.

I personally don't think this is an issue, because the success of the existing Bitcoin network creates a very strong barrier-to-entry for competitors.  Who is going to participate or invest in a competing cryptocurrency when Bitcoin already has such a long head start?  Why would anyone switch over when Bitcoin is already so well established?  It would take significant, compelling new features in any competing cryptocurrency to convince people to switch over to it.  Maybe it will happen someday, but I personally don't think it will be soon...

Your premise is incorrect. For every BTC created, dollars and other currencies do not need to be "injected" to support Bitcoins current valuation.

The market cap of BTC is $106 million according to Bitcoinwatch.com at the moment. This does not mean that $106 million of currency has traded hands. If you were to add up all the currency from every exchange (and on IRC and in the forums) you would not get $106 million after accounting for people trading in and out of the market.

Whenever BTC are created only a small portion of them are sold for currency on the exchanges. Many miners hold or trade their BTC.

In short, only a small amount of currency needs to be brought in to sustain current valuations.

I hope that helps explain why monetary injections will not be a problem.

The money does not have to "come from somewhere" in form of dollar denominated cash. If people trust the system, goods/services can be bought with it, it will work. A deposit of backing money for the full capitalization isn't neccessary. Try to ask the same for gold: "where does the money come from to cover the price of the newly mined amount"? Doesn't make much sense, does it? :) If (rather big if) bitcoin becomes a universally accepted commodity, no money will need to be brought in.

I think money supply and demand is out of scope of Econ 101 :) But it is a bit more complicated than the market of goods.

Same could be said for Facebook, yet Facebook is dominating the net since years. Not because of patents. Because of the network effect rewarding the first one.

Where does this money come from?
Based on the number of Mt. Gox accounts I would be very surprised if there are more than 50k users of bitcoins at the moment. That is extremely few. Even if bitcoins never even get close to mainstream acceptance it is not hard to imagine many times the current user base. The $1,000 transaction limit is just something voluntarily imposed by one excange. There will be many more exchanges and some of them bigger operations than the current ones. If the interest in bitcoin continues to be high the money will have no problem to come. And as many others have already explained the huge numbers you mentioned are not needed to sustain the value.

Bitcoin in unpatented intellectual property.
While it is easy to make a competitor to bitcoin, being first is a big advantage. Try making a site like Facebook but a bit better and see how popular it will become. Sure, if google made something like it bitcoin would be in trouble, but there are many reason to belive that no large actors will dare to until much later, and then Bitcoin will be established. The open source nature is one of the main strengts of Bitcoin.

The bottom line.
Bitcoin can fail. Of course. Most of us only invest a little in bitcoin as we understands it to be a high risk project. But there is also a chance it will be the next big thing. I would imagine your situation is similar to mine and this was my reasoning:

I have now spent considerable time reading up on Bitcoins. I like the concept and would love for it to suceed. I would love to be a part of that success story. If I consider investing a sum I can afford to lose, for example $1000, there is four extremes that could happen:

a) I invest and bitcoin fails. I feel a bit bad for betting on the wrong horse, but even more because I would liked it to suceed.

b) I do not invest and bitcoin fails. I will be pleased for making the right decision but still sad to se it fail.

c) I invest and bitcoin suceeds. I could have earned quite a lot and even better I have been part of something great, someting that maybe changed the world.

d) I do not invest and bitcoin suceeds. I will feel very bad for missing out on this. After all I was one of the first that saw the potential but decided not to take the risk.

From these four I myself decided that not investing at all would be a bad decision. I have treated Bitcoin like you should any high risk business venture, that is only make a limited investment.

Lol, I bet there would be like 0 ppl in the project if it were not open source.
And before you invest, read.
Don't listen to people. Just read the info, analyse it, wait a week or more before investing (if you're doing it for long-term). Or just don't invest if you think it's risky.

Stop trying to use market cap. to make decisions.

Prices are set at the margin.  This is a fancy way of saying that despite the whole town owning Bitcoins, just two guys can go into a room and exchange a single bitcoin back and forth between with each other for escalating amounts, perhaps tripling the value overnight. How much net money had to flow into the economy? None. Yes, in your model the market cap would increase immensly, but it would be a mistake to assign any relevance to it and assume that's how much money 'flowed in'. Let the concept of market cap. go, it has no relevance in a zero sum scenario like a currency.

Market cap. assumes that just because there was 1 buyer at a particular price then everyone is willing to pay that price. The Bitcoin flash crash last week should be proof enough that the premise is false.

Market cap is the upper bound of what you could get for an asset provided you only sell an infinitesimally small portion of it, in other words its purely academic and has no use in the real world.

[/rant]

That may not help you to decide whether to invest in bitcoin, but I hope at least it will help steer you away from basing the final decision on a bogus valuation. My advice is to pull the trigger; based on the fact that nothing focuses the mind like having skin in the game. Once in then decide whether to stay in or not.

Edit; While I was typing I see other people have picked up on this theme, but I'll post anyway.

If you think any of this is even remotely likely to happen in the not too distant future you should probably invest:

1: The Bitcoin gets adopted by a (likely third world) country with very inflationary currency due to its deflationary nature

2: The Bitcoin gets adopted of a large part of the online-merchants and become a serious competitor to Paypal due to lower fees, anonymity, ease of use, lack of chargebacks, tax-benefits etc  

3: The Bitcoin gets popular in the criminal world due to combining the best of online-banking/paypal +clones (wordwide transfers of wealth without transporting anything physical) with that of cash (anonymity). Will probably be used for money-laundering.

If any of this happens the Bitcouin will go up a LOT, so even if you think the likelyhood is a lot less than 50% it would be worth throwing in some $. And if you, like me, think it's more than 50%, well, buy as much as you can afford ;)

Oh boy... here I go!  ;D


Everything you have said there is true, but might lack some important information, or rather deductions.
For the sake of argument, I'm willing to assume the daily 1000$ limit will stay the same in a worldwide competition of exchanges, each of them in a different jurisdiction. (I hope you see how this is hard to believe.)
Even if the amount of bitcoins to be sold was as high as you think (which I doubt, many are simply saving them), exchanges are only one method of getting BTC. I got all my BTC by buying directly from miners.
Another method, which will not be shown when you look at numbers on MtGox or TradeHill, is to sell or work for BTC. This is at the moment wrongly overlooked, because it is way easier for a merchant to accept BTC than any other currency. Once again: a merchant can setup is own business and start accepting payment without a single call to a bank. You want to try a little website project? Use Bitcoin! So in response to your first concern: you don't literally need new money to come in, but rather new value. What is the value of a monetary system without the need of a middle man? No overhead, no paper to fill, no delays, no frozen account. This is a good news for everyone producing something of value. 

The network effect is in play here.
Can I go and make a website identical to Facebook? Sure! (Please don't bring any intellectual property argument - there is more than one country in the world, many in which it is perfectly legal to do so.)
But if I make such a site, who will come? All your friends are already on Facebook...
The same thing is true with Bitcoin. The websites are being developed for BTC, the exchanges in place are for BTC, the name Bitcoin is known! (Brand power)

The other argument in favor of BTC in this case is the blockchain. The longer it is, the harder it is to counterfeit. In addition, the current hashing power in the network is huge, making it more secure than any other wannabe Bitcoin clone.

There is no such thing as bad press for Bitcoin in the current stage of its development. All you can do is attract new users. Current users know when articles are BS.
The lack of merchant is temporary. If you have looked at the wiki merchant's list a month ago and compare it to what it is now... wow, simply wow!

If it isn't already done, you might want to look at this article: http://falkvinge.net/2011/05/29/why-im-putting-all-my-savings-into-bitcoin/ (http://falkvinge.net/2011/05/29/why-im-putting-all-my-savings-into-bitcoin/)

1PNxesEoWQViHZ8BSjpodqmBB9RpbWFVhT

The first question is just a complete misunderstanding of market cap. The second is a legitimate concern but IMO unlikely due to first-to-market advantage.


You don't need this influx of money. The current market cap of Bitcoin is 106,482,730 USD. If the price of Bitcoin doubled in the next couple of days, it would not require 106,482,730 USD of investment. It's quite possible for money to flow out of Bitcoin and for the market cap to increase. Make sense?


Firstly, Bitcoin has a first to market advantage. Any competitor would have to have a huge technical advantage or perhaps a marketing advantage e.g. Google to release a decentralised crypto currency. That advantage would have to overcome the hurdle of a 100 Mil market that already exists. You would also be requiring a large company to take a risk on a technology that would potentially become illegal.

Secondly, Bitcoin is the technology and not the business. Think of HTTP and HTML and how it's used by two competitors such as MySpace/Facebook. HTTP/HTML was the technology behind both. It originated in CERN and once it was created and people started using it, it would be very hard for someone to come along and change the base technology once it's been adopted by a large group. THey may change how they use it, they may build different businesses upon it but once it becomes accepted by a group then that technology becomes the obvious foundation to build upon. In fact, it amazes me just how much the web has changed over the years and yet the driving force behind much of that change is innovatiion rather than adaptions to the technology itself.

Hope that helps.

You can put your 1 BTC here ... 1MCoDAms5xMNs3WHm1jaXfUMVGRrHwTSsi

look at the chart...

http://www.google.com/imgres?imgurl=http://cs702.files.wordpress.com/2011/05/bitcoin-price-chart.png&imgrefurl=http://cs702.wordpress.com/2011/05/29/on-the-potential-adoption-and-price-appreciation-of-bitcoin-in-the-long-run/&usg=__Tqo6ClGga-ZBY_sJp1wIlRI1iDI=&h=348&w=659&sz=6&hl=en&start=0&zoom=1&tbnid=AUnZ8xiuPef88M:&tbnh=93&tbnw=176&ei=xmoGTpzVCsro0QHcmqjZCw&prev=/search%3Fq%3Dbitcoin%2Bchart%26um%3D1%26hl%3Den%26sa%3DN%26biw%3D1573%26bih%3D703%26tbm%3Disch&um=1&itbs=1&iact=hc&vpx=350&vpy=326&dur=384&hovh=93&hovw=176&tx=164&ty=71&page=1&ndsp=33&ved=1t:429,r:14,s:0

1 BTC please..numbers don't lie  ;D

I was going to go big into bitcoin until I realized that bitcoin's encryption algorithm and the entire blockchain will be rebuildable in a single afternoon by the average kid's computer in 5-6 years....

This thread was actually quite interesting and troll-free up until now :(

Remember the Million Dollar Home Page, http://www.milliondollarhomepage.com/ (http://www.milliondollarhomepage.com/)...

There can be only one.  Lots of copycats but none ever succeeded.  Not to mention, bitcoin already has a two year head start.  Personally, I don't think there will be a fork unless a really good feature comes along and WE want to change.  But when we do, I'm sure we'll be able to "exchange" existing bitcoins for the new bitcoins.

Failure is a possibility in anything.  The upside of bitcoin is so great, that a risk is worth taking.  But just so you can sleep at night, only invest as much as your can afford to lose.  I'm in it for a few bitcoins and happy to just be part of it.  Sure it's just 0.00000001% of all bitcoins, but 0.00000001% of the world economy when this hits will be worth something, don'tcha think?

This bitcoin may no longer exist in the future, but the idea of bitcoin will live on forever (decentralize and p2p.)

Because soon BTC will be worth > $100 each

The Bitcoin boats 'docked' at the moment. Its up to you whether you get onboard.

Yes.  He's significantly exaggerating the steepness of the Moore's Law trend.  Also, not many people realize it yet, but the power-performance of digital computers is only about 10-20 years away from reaching certain fundamental thermodynamic limits, which no amount of engineering cleverness will be able to circumvent.  (Well, except for some real long-shots like reversible computing.)  So, mining power per watt will level off long before things improve that much.

+1000.

Here's the way I see it:  The total size of the world money supply of all sovereign currencies is on the order of $100T today, expressed in USD units.  Suppose that there is a potential for Bitcoins to eventually take over just 10% ($10T) of that market, and allow that their supply may get inflated 100x by fractional-reserve banking with only a 1% reserve requirement.  That still means that, even when the 21M BTC limit is approached, EACH BITCOIN will be worth almost $5,000.  Even if you think there's only a 10% chance that this scenario (or a more favorable one) may play out, that still means that you should assess that your expected long-term value for 1 bitcoin is AT LEAST $500.

I'm just going to use your quote because it's hard to address everyone individually (although thank you everyone for your input).  I have to disagree with your assertion and it's what concerns me the most.  There are very low barriers to entry.  Bitcoin is open source, it's out there for everyone to see and replicate.  There are many barriers to entry but the primary ones are cost of capital, geography, and regulation.  I'm sure there are more but I'm just going off the top of my head.  Bitcoin has none of those barriers.  

My example of Pfizer would be a better example of a high-barrier-to-entry.  They are protected by patents, have to spend millions on R&D and have to deal with the FDA scrutiny/approval process.  THOSE are high barriers to entry.  Bitcoin can be recreated relatively easily by a saavy computer developer(s).

I'm also a bit surprised about the first to market and Facebook examples.  Facebook was most definitely NOT first to market.  Asian Avenue, MySpace, there were tons of predecessor social networking sites.  Facebook just improved on those concepts.  If anything, Facebook strengthens my point.  It's the latest and most successful incarnation of social networking.  But first?  Not even close.

Speaking of market cap (whether you feel it relevant or not) you simply cannot have an unprotected multi-million dollar concept, or whatever you want to call it, and not expect to see immense competition.  If a guy was selling hotdogs for $50 each, that costs him $2 to make, AND posts his recipe for everyone to see, wouldn't you or someone else come in and start selling hotdogs too?  Of course!  Because there's profit to be made.  That's why I say it's simple economics, to think BTC can go to $100 or whatever arbitrary number you want to use without factoring in competition is coming to a conclusion missing a very important variable.

I just want to finish by saying I'm not trying to sway people one way or the other.  I think it's been a great discussion.  But for me, this is the way I do my investing/speculating.  I play devil's advocate and see what type of responses I get.  

Get in on bitcoin and get in on the competition...win/win...again, with only with as much as you can afford to lose. win/win/win

Neither is Bitcoin. There was many, many, MANY attempt at virtual currency. Bitcoin is simply the most successful incarnation  ;)

You give as an example for high-barrier-to-entry business Pfizer. However, this barrier is artificial and created by a web of regulations. I would not invest my money in such politic-dependent enterprise, but rather in those which create real value.

Deflation due to limited supply.

Send to slush

What your argument is missing is the fact that Bitcoin is fully decentralized, so no company can just create a Bitcoin 2.0 and profit. Anyone trying to create a for-profit version of the technology will need to centralize the function mining provides in Bitcoin: transaction validation and currency issuance. If Google created gCoin and intended to profit from it the design would make the product a new Beanz instead of a new Bitcoin. Would you use a new Beanz? Would anyone else? The key distinction is between centralized and decentralized digital currencies.

The only threat from competition is from a superior technology. Even in this case if enough users want to keep the existing blockchain they may find consensus to use it to bootstrap the new technology. If that happened your existing bitcoins would still be valuable.

go with your gut, if your weary, then sail along to something else that floats your boat, why belabour it?

good luck and good bye

Your first question is a misunderstanding of market cap. There's no room for subjective debate here. It's a question based upon a false premise regarding in-flow of USD.


That was my point. Facebook came after a plethora of social networking sites but it was based upon technologies that had existed for years... HTML, HTTP, PHP, Javascript.

Nobody in their right mind would design PHP these days. Trust me, it's f&*(ing horrible and ASP ain't any better but they're used because there's a huge intellectual and infrastructural investment in them. So people take these crap technologies and they invent! They create PHP frameworks and Javascript libraries. That's how the world moves on.

The 'profit' comes from finding new ways to utilize the technology e.g. building Amazon.com. That's where the future money is but right now the money can be made by simply recognizing it as a unique and ground breaking concept and buying some BTC.

People will take the path of least resistance because high utility from a small amount of effort is how we make profit/money. Bitcoin2.0 would be hard to create, even with a significant amount of investment.

Where would you start? If you're the Google CEO and you want to start gCoin (a theoretical decentralised, P2P currency publicised by Google) - leaving aside all the political/social/legal entanglements that a blue chip would want to avoid - your best bet would be to take Bitcoin 1.0, make some minor improvements (hard to think what they'd be to be honest but let's assume you can make some) then repackage as gCoin (still decentralised BTW but with Google brand) and offer out 6.5 million gCoin with a $30 guarantee each. Essentially offer free money to the world! The money would likely be snapped up by those with no understanding of the currency who would be eager to cash out. But say it wasn't, let's assume the 6.5 million gCoins were bought by a group of techies/nerds who could see the potential, then the curreny might take off and a gCoin might be worth 1000 USD in future. Great! What's Google got out of this? Nothing. They were willing to act as guarantor to a fledgling currency that creates no profit for them.

RE: Mining - I personally don't touch mining. It's a hugely competitive and near perfect market so economics tell us that the profits will be low (not for an individual but for the market as a whole). In short, adjusting for the BTC price increase, bitcoin mining is low profit unless you have something that separates you from the crowd and for those few the profits are huge. So personally, I earn money in my business and buy a small BTC investment rather than mine.

I'm always a little bit surprised that people can't see how unique and interesting Bitcoin is. It's like watching the first email to be sent and then shrugging your shoulders and walking away. Very odd.

30 Million a year is nothing. That's the revenue of a small company. Remember that Bitcoin is a global project. There are now Bitcoin early adopters in the most remote corners of the world, and most people in the world haven't heard about Bitcoin yet.

There are 1 Billion internet users in the world. If just 0.3% (3 Million) of them join Bitcoin in the next 12 months and spend $10 to give it a try, the price will stay where it is.


So is Wikipedia. It is very easy to copy Wikipedia and make a for-profit fork. Even Wikipedia's content can be used commercially as long as it's published under the same license.  Yet, nobody seems to have succeeded with this. Well, there are a few examples but their user numbers are negligible compared to the original Wikipedia.


Why is that? Mainly because of network effects and "community spirit".

Network effects are even stronger for Bitcoin than for Wikipedia.

A closed-source version of Bitcoin would lose the emotional appeal of decentralization. It would be no better than the dozens of centralized virtual currencies already out there: liberty reserve, linden dollars, pecunix, ...

I agree with people here that because of the network effects there will probably not be a successful competitor to bitcoin unless it's radically different, or at least have some kick-ass features that Bitcoin lack. That's why we have near-monopoly on services like Facebook, E-bay, Paypal, Wikipedia etc. Why do we use these services? Because everybody else does. All of them might not have been first of its kind, but they were first to reach the "critical mass" were the network effects get so important that they can't be out-competed by a similar product. I would say Bitcoin have just reached the critical mass. Not that I can back this with numbers or anything, but that's the feeling I get.

Talking about numbers, can you explain yours? Why would the exchange-rate stay the same? 3 million spending 10 each tells you something about demand but nothing about supply, i.e. how many will sell at the same time and to what price

Never invest money that you can't afford to burn.  If you lose it, you're still ok, if you make it big, more power to you.

Prices trend upwards, even after a massive security disaster -> BTC is bulletproof.

I think invstment is a good idea. Especialy now when world is overflowed with crypto curencies.
I invested some of my money into @Viberate_com platform.
You can read more about it on link bellow:

https://www.viberate.com/participation

Whish you all to invest the right way!

I wonder if OP got his questions answered since 2011. If so, did he pay out the 1 BTC yet? If not, OP do you still have questions about BTC? I can help answer for that 1 BTC bounty. PM me.

I wasn’t really interested in bitcoin when the price was $1800. Then few months passed and I saw the price again – it grew to the amount of $3000+. Now I heard it’s $4000+ but I didn’t check myself.

If you say true then I will be the first person who can motivate you to be a successful person for the future. Bitcoin as the core of the digital currency is supported by some crypto currencies such as ETH, Rippler, Bitcoin Cash and others. Bitcoin will be a higher value. 8)

You should have not to be wary to invest specially in bitcoin, remember market is not a person,  imagine to nothing started bitcoin but now bitcoin is most popular all over the world, some people try to insist perverteth bitcoin but no matter what do bitcoin is still standing in front of them.

I will be stubborn or big in bitcoin until I can realize that the bitcoin encryption algorithm and the entire blockchain will be able to be rebuilt in the afternoon by an average kids computer aged 6-7 years. 8)

You should not wary to invest, put your mind in what you  want to get and put it on a mission, you will have testimony

Bitcoin value come from supply and demand.
It's very simple, like in any other market in the world.
When demand is higher, price will go up and when more people sell, btc value will go down.
Yes, bitcoin is risk but, in my opinion, not bigger risk than any other market in the world.
Still, you have much bigger chance to earn here than in gambling or casino :)

If you are really giving away a btc, that means you have a healthy chunk to throw in.
If it were me, I would break up my entry buying more each $500 dip in the btc price.

I'd then trade 25% of my btc for alts, preferably some in the top 10.  If you want to go outside the top 10, Wanchain and ICX have flourished during btc runs.  This is certainly a prime time to have cash on deck as playing this dip can be super profitable with a big stack.

Yes, someone is lazy, to learn something new, to act, as the saying goes - people do not have the patience to build a business for 3 years, but have the patience to go to work for 30 years. And all this is largely due to laziness. You should always look away. Passive investing may be the way to go lazy, it is not strange sounds, but nothing is done about it, and they do not need to use your head.

America took over the title of world financial capitol after WW1, and continued with the same central bank modeled after the BOE.  Challenges to the western central bank's dominance over the control of money and credit have been met with force.  Be the challenge from other countries, individual currencies, or strict gold accounting the central bank has survived - for 300 years.  The role of the central bank in the wars, genocides, etc especially of the 20th century is well documented, and many of these things would not be possible if not for it

https://ipfs.io/ipfs/QmccZ4TJZCFxcB1QGsAc3VVueSqzsoPFk9rJbkwnn9ymwh

It states here that there are atleast 1,000 transactions per block if you do the math since there are about 8,000 transactions per hour and 8 minutes per block generation. Just look at the staggering amount of recorded transactions that the Bitcoin network is keeping for the past 9 years.  You are aware of Cambridge Analytica and the bad press about them just think for a second how much money changed hands between them and Facebook just to avail of the customer data from Facebook. Now think about the database that the Bitcoin network is building right how much do you think it will cost. It is available to everyone and it is backing the value of Bitcoin now and into the future. The database of transaction is so huge that there is no way to see it as something finite. Data is the number one treasure of Bitcoin. There is no way that something like this could be a "B" . If you believe in bad press there is no way that you will be able to see an analysis such as this one.

https://ipfs.io/ipfs/QmS5czCKHDzEiaRtWW5dp7FHG5Koz7cmFByXEabBVvwhEg

Forty two coin is an alternative coin but today one unit is worth more than 26,000 thousand dollars. The whole cryptocurrency market is in a slump but 42 coin is resilient. Just think of a way on how to sustain a coin with just 42 units. Bitcoin has 21,000,000 million units and you think that it is unsustainable but this coin is seemingly sustainable?

https://ipfs.io/ipfs/QmaGkTQtdotzCTMdenPGKqK6EnaCLAWfuEwJRq3ipU3Cqk

BIT20 is an index fund of top 20 cryptocurrencies and last January there was a point when it reached 400,000 dollars per unit. This fund is a cryptocurrency fund. If it can breach 400,000 dollars what will stop Bitcoin from reaching 1,000,000 dollars per unit. Do you still think that Bitcoin is unsustainable. Yes it lacks the patent but just as you have stated a patent is limited to 25 years. Bitcoin doesn't like 25 years of life span. Besides, a patent is a publicly available pieces of documents. Anyone can copy your idea and concept once you apply for a patent very similar to open source.